L.R. NO. 2288-01
BILL NO. SB 586
SUBJECT: Taxation and Revenue-Property: Elderly
TYPE: Original
Net Effect on All State Funds
FUND AFFECTED
FY 2001
FY 2002
FY 2003 General Revenue
$0
($1,300,000)
($1,300,000)
Total Estimated
$0
($1,300,000)
($1,300,000)
| FUND AFFECTED | FY 2001 | FY 2002 | FY 2003 |
| None | |||
| Total Estimated
Net Effect on All Federal Funds |
$0 | $0 | $0 |
| FUND AFFECTED | FY 2001 | FY 2002 | FY 2003 |
| Local Government | $0 | (Unknown) | (Unknown) |
Numbers within parentheses: ( ) indicate costs or losses
This fiscal note contains 4 pages.
ASSUMPTION
Officials of the Department of Revenue (DOR), the State Tax Commission (TAX), and the Office of Administration (COA) stated that this proposal would not affect their agencies materially. (Oversight notes that there could be a savings to the General Revenue Fund since the circuit breaker property tax credit is a refund of property taxes paid by an individual. Since the proposal would limit the amount of property taxes paid, some circuit breaker payments would be less than under current law. It is unknown how many individuals would claim this property tax exemption, or how much payments would be reduced. Oversight assumes the effect would not be material.)
State Tax Commission (TAX) officials estimated possible loss of income. The Veterans Administration has identified about 3,000 service-connected 100% disabled veterans in Missouri. If all 3,000 had a $50,000 home, the exemption would total approximately $1,700,000 statewide.
(3,000 x $50,000 = $150,000,000 x .19 = $28,500,000/$100 = 285,000 x $5.90 = $1,681,500. Oversight notes that Blind Pension Fund losses would be 285,000 x $.03 = $8,550, an amount Oversight does not consider material.) The 1990 census indicated that about 70% of occupied housing units are occupied by persons who own the units. Recent increases in assessments for residential properties have been 12% in reassessment years. ($1,681,500 x.7 = $1,177,050 x 1.12 = $1,318,296)
TAX officials also noted that over the long term the effects of this proposal should decrease unless there are wars.
TAX officials and the Cole County Assessor note that assessors would have to maintain two sets of assessments for exempt parcels. It is not possible to estimate how much those costs would be until assessors could determine how many parcels would be affected; therefore, unknown additional costs to county assessors are reflected in the fiscal impact to local governments.
Department of Elementary and Secondary Education officials note that the proposal would decrease tax collections, which would increase the amount needed to fully fund the Foundation Formula. They also noted that 1) "on the formula" districts would recoup their losses through state payments, and 2) "hold harmless" districts would not recover losses through additional payments through the Foundation Formula.
Oversight assumes that:
1) 70% of disabled veterans could use the proposed exemption;
ASSUMPTION (continued)
2) possible losses will increase 12% in the fiscal years following reassessment (e.g. FY 2002 following the 2001 reassessment); and
3) some political subdivisions could recoup all or part of lost collections through adjustments in rates, but subdivisions with tax rates at or above tax rate ceilings could not do so.
FISCAL IMPACT - State Government FY 2001 FY 2002 FY 2003
(6 Mo.)
GENERAL REVENUE FUND
Cost - Reimbursements to Political
Subdivisions $0 ($1,300,000) ($1,300,000)
NET EFFECT ON GENERAL
REVENUE FUND $0 ($1,300,000) ($1,300,000)
FISCAL IMPACT - Local Government FY 2001 FY 2002 FY 2003
(6 Mo.)
POLITICAL SUBDIVISIONS
Income - Reimbursements from State $0 $1,300,000 $1,300,000
Loss - Reduced Property Tax
Collections $0 ($1,300,000) ($1,300,000)
Cost - Assessor costs to keep two sets
of books $0 (Unknown) (Unknown)
ESTIMATED NET EFFECT ON
POLITICAL SUBDIVISIONS $0 (Unknown) (Unknown)
FISCAL IMPACT - Small Business
No direct fiscal impact to small businesses would be expected as a result of this proposal.
DESCRIPTION
This proposal would authorize a homestead exemption for purposes of real property tax relief for veterans who are one hundred percent (100%) disabled due to service-related conditions and who own and reside on property which qualifies as a homestead under terms of section 135.010, RSMo.
The proposal would also require the state to reimburse political subdivisions for lost revenues which are not recouped through adjustments in tax rates or increases in payments through the Foundation Formula.
This homestead exemption would be effective for years beginning on or after January 1, 2001.
This legislation is not federally mandated, would not duplicate any other program and would not require additional capital improvements or rental space. This proposal would not affect Total State Revenue.
SOURCES OF INFORMATION
Department of Elementary and Secondary Education
Department of Revenue
Office of Administration
State Tax Commission
Cole County Assessor
Jeanne Jarrett, CPA
Director
January 10, 2000